Carmax stock pops on earnings

Carmax (KMX) shares opened higher after the used car retailer reported a better-than-expected third-quarter profit, with cost cuts and strong pricing helping to boost results.

Yahoo Finance’s Seana Smith and Brad Smith break down the results.

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Video Transcript

SEANA SMTH: To one of the movers in the premarket, and we're obviously expecting it to keep moving here through the opening bell. And that is CarMax shares spiking today, you're looking at gains just about 12.5% ahead of the open. Now the used car company CEO, touting, quote, "several quarters of sequential improvements in its latest quarterly result."

Also announcing that it is resuming its share repurchase program, strong pricing for used cars, also cost cutting measures, helping CarMax in its most recent quarter. And Brad, when you take a look at some of these numbers, a bit surprising, given the fact that average transaction prices still north of 27,000, well above historical norms, a lot of people simply cannot afford used cars.

BRAD SMITH: I want to be happy about this, but I, unfortunately, have to tap the grinch button on this one. They're talking about persistent widespread pressures that they've had to navigate through, that's going to continue to happen. You look at the average selling price, that's actually down single digit percentages, both on used vehicles and wholesale vehicles. So the market's perhaps a little relieved that it's better than feared, given the environment that they're in.